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September 24, 2013

Why Social Media Is Not an Alternative to Networking and Referral Marketing

Social media doesn't replace networking, it's just another medium for being social

As social media becomes increasingly popular, the financial planning world has struggled to figure out how social media marketing fits into the big picture. Where can an advisor find time to engage in social media amidst other efforts to network, develop business and drive referrals? And of course, all of that marketing activity has to fit around the time to actually run a business and serve clients, too.

Yet from a best practices perspective, social media shouldn't be viewed as an alternative to networking and referral marketing. Instead, social media is simply another way to do networking and referral marketing in the first place!

After all, social media success still ultimately relies upon making personal connections and building relationships to generate new business. Or viewed another way, relationship marketing is all about being social, and social media is just another medium for being social.

The caveat, however, is that while networking meetings and referral marketing are often a slow, one-client-and-center-of-influence-at-a-time effort, time invested in social media can be leveraged to reach dozens, hundreds, or even thousands of prospective clients at once.

In other words, ultimately social media is not an alternative to networking and referral marketing; it's simply a more leveraged and scalable way to do it! Which also means if you're trying to figure out where to find the time to start getting engaged on social media, you might look to carve the time from some of your other, less efficient and effective marketing activities.

Social Media as Networking and Referral Marketing

The truth of financial planners using social media, which is intuitively obvious to most people anyway, is that no financial planner gets a new financial planning client just by sending out a tweet one day. If getting someone to transfer their life savings to you was as easy as putting together 140 characters into a tweet or two, we'd all be overflowing with clients at this point. Instead, the reality is that connecting with new clients — and centers of influence who can refer them — happens by establishing relationships, and relationships in turn require cultivation through an ongoing series of interactions to build and establish trust.

Accordingly, financial planners engage in the ongoing steps with clients and centers of influence to build and establish trusting relationships, necessary to develop business, generate referrals and gain new clients. Of course, just as with social media, the reality is that trust is not instantly established the first time an advisor shows up at a networking meeting or asks for a referral, either.

Instead, as Stephen Covey discusses in his book "The Speed of Trust," a positive balance in the "trust account" is built up over time by consistently engaging in the key behaviors that establish trust, a combination of character-based behaviors (e.g., talking straight, demonstrating respect and being transparent) and competence-based behaviors (e.g., delivering results, confronting the difficult issues and continuing to improve yourself).

However, the truth is that demonstrating and engaging in these key behaviors over time simply requires engaging with others in a social environment, not necessarily any particular social environment. Which means ultimately, these steps to building trust can potentially occur in any social medium, whether it's a networking meeting or a conversation on Twitter. In other words, social media doesn't replace networking, it's just another medium for being social (Tweet This!), and to the extent that trust is built through social interactions, it can be done via social media just as it can be done via in-person social interactions as well.

And in a similar manner, just as generating referrals through networking events typically happens not at the first meeting you show up to, but only after an ongoing series of interactions that establish your trustworthiness and credibility, so too does social media require a series of ongoing interactions to build trust over time. The point is not to send out a single tweet to get a client; the point is, just as with in-person marketing and networking, to become a trusted source of credible information and solutions through an ongoing effort to make deposits to your trust account with all those you interact with in that social environment, culminating in an opportunity to do business with (or generate referrals from) those people with whom you have built a connection.

Why Social Media Over Other Marketing Approaches?

So if social media marketing still demands the same kind of consistent and ongoing relationship-building efforts that traditional networking and referral marketing require, then why bother changing to a social media marketing approach? The answer, in a word: efficiency.

The challenge of doing in-person networking is that it can be remarkably inefficient. There may not be a lot of networking opportunities in the area, or the competition with other financial advisors may already be significant; furthermore, some people just struggle to network and market themselves effectively in the first place. The end result can be hours spent out of the office at a networking event, just to walk away with only three business cards, none of which turn out to be opportunities to do business together or generate referrals. And the only way to collect more business cards and make more connections and hopefully develop more relationships is to spend even more time going to networking events.

By contrast, when engaging in social media marketing to deliver on the core aspects of an inbound marketing approach as a financial advisor — finding, creating and sharing relevant content to your target audience that establishes you as a trustworthy and credible provider of solutions — the effort is substantively the same whether you are reaching dozens, hundreds or thousands of prospective clients and referral sources via Twitter, LinkedIn, Facebook and other platforms.

From the perspective of getting started, that can be a significant challenge, as a significant time commitment is necessary and the early results will be very limited.

Yet just as in building all other aspects of a business, scalability and long-term efficiency are keys for long-term success.

In addition, it's worth noting that social media activity can have other, indirect benefits that make the time more valuable as well. Social media activity can make in-person meetings with prospective clients more efficient, as people who meet with you will already have had a chance to get to know you and get comfortable with you; if it's someone you won't get along with because they don't agree with your planning views and philosophy, that will likely come through in your social media presence, which means they will never contact you and waste your time in the first place.

Conversely, those who do find a connection with your views and perspective will essentially be "warm" leads who already feel a connection with you the very first time you meet, accelerating the in-person trust-building process. Furthermore, the greatest social media success ultimately builds on itself; if you deliver valuable information, eventually the people who follow you will share that information with people who follow them, and your network will build on itself simply on the basis of your existing, ongoing efforts. This can be especially important if the goal of the business is rapid growth, or if your business model requires a higher volume of clients to be profitable (e.g., hourly planning).

The bottom line, though, is simply this: while the initial time investment may seem like a lot of effort with very little payoff, it's crucial to remember that unlike traditional networking, as the social media audience and success grows, the results can increase exponentially while the time obligation remains the same. In other words, social media is a fantastically scalable marketing effort for a small business.

In my next post, I'll offer five tips for finding time to start social media marketing.

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